Please see below article received from Brooks Macdonald this morning, which provides a market update for your perusal.
What has happened
A degree of relative calm returned to markets yesterday, as fears of a worst-case Middle East conflagration eased. While Iran and Israel continue to trade attacks, there is a growing view that the latest conflict might yet be contained. Avoiding further escalation, Israel has not targeted Iranian oil production while Iran has not targeted US people or assets in the region – and crucially for the oil price, Iran has as yet shown no interest in blockading the Strait of Hormuz through which close to 30% of the world’s seaborne oil trade goes through.
Signs of Middle East de-escalation?
Rather than ratcheting up, it seems the conflict might even be de-escalating behind the public rhetoric. The Wall Street Journal said yesterday that Iran was signalling it wanted to end hostilities and restart nuclear talks, citing unnamed Middle Eastern and European sources, while a similar report by Reuters said that Iran conveyed that message through Qatar, Saudi Arabia and Oman. Separately, Iranian foreign minister Abbas Araghchi yesterday said that “the Islamic Republic of Iran has never left the negotiating table”. According to US news website Axios, there may be meeting this week between US Middle East envoy Steve Witkoff and the Iranian foreign minister to discuss a nuclear deal and an end to the Israel-Iran conflict.
Markets shift back to risk-on
Global equity markets rose, while US government bond, gold and oil prices all fell back yesterday. The US S&P500 equity index finished yesterday up +0.94%, recouping most of Friday’s -1.13% decline, while the pan-European STOXX600 equity index was up +0.36%, having dropped by -0.89% on Friday. Overnight in Asian equity markets, the Japanese Nikkei225 equity index has closed up +0.59% (all equity indices in local currency price return terms).
What does Brooks Macdonald think
Overnight the Bank of Japan has left interest rates unchanged and announced it is looking the slow the rate at which it reduces its bond purchases next year, both decisions widely expected. On the latter, the Bank is presumably hoping to take some of the heat off Japanese government bond yields which have risen this year. This is all market positive as it reduces the risk of ‘something breaking’, avoiding a redux of the market hiatus last August when the Bank hiked rates unexpectedly.
Please check in again with us soon for further relevant content and market news.
Chloe
17/06/2025